Correlation Between Passage Bio and Edgewise Therapeutics
Can any of the company-specific risk be diversified away by investing in both Passage Bio and Edgewise Therapeutics at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Passage Bio and Edgewise Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Passage Bio and Edgewise Therapeutics, you can compare the effects of market volatilities on Passage Bio and Edgewise Therapeutics and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Passage Bio with a short position of Edgewise Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Passage Bio and Edgewise Therapeutics.
Diversification Opportunities for Passage Bio and Edgewise Therapeutics
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Passage and Edgewise is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Passage Bio and Edgewise Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edgewise Therapeutics and Passage Bio is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Passage Bio are associated (or correlated) with Edgewise Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edgewise Therapeutics has no effect on the direction of Passage Bio i.e., Passage Bio and Edgewise Therapeutics go up and down completely randomly.
Pair Corralation between Passage Bio and Edgewise Therapeutics
Given the investment horizon of 90 days Passage Bio is expected to generate 2.76 times less return on investment than Edgewise Therapeutics. In addition to that, Passage Bio is 1.42 times more volatile than Edgewise Therapeutics. It trades about 0.03 of its total potential returns per unit of risk. Edgewise Therapeutics is currently generating about 0.11 per unit of volatility. If you would invest 1,741 in Edgewise Therapeutics on September 1, 2024 and sell it today you would earn a total of 1,559 from holding Edgewise Therapeutics or generate 89.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Passage Bio vs. Edgewise Therapeutics
Performance |
| Timeline |
| Passage Bio |
| Edgewise Therapeutics |
Passage Bio and Edgewise Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Passage Bio and Edgewise Therapeutics
The main advantage of trading using opposite Passage Bio and Edgewise Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Passage Bio position performs unexpectedly, Edgewise Therapeutics can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Edgewise Therapeutics will offset losses from the drop in Edgewise Therapeutics' long position.| Passage Bio vs. Tff Pharmaceuticals | Passage Bio vs. Eliem Therapeutics | Passage Bio vs. Inhibrx | Passage Bio vs. Enliven Therapeutics |
| Edgewise Therapeutics vs. Tff Pharmaceuticals | Edgewise Therapeutics vs. Eliem Therapeutics | Edgewise Therapeutics vs. Inhibrx | Edgewise Therapeutics vs. Enliven Therapeutics |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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